Prices may keep rising at the grocery store, but the general trend in all of the major grains and oilseeds continues to grind lower, with mid-January wheat bids hitting some of their weakest levels of the past few years.
World supplies: Wheat is grown around the world, and supplies are more than sufficient to meet demand for the time being. Updated estimates from the United States Department of Agriculture released Jan. 12 pegged 2023/24 global wheat production at 784.9 million tonnes, up by 1.9 million from an earlier estimate, with projected ending stocks also raised by a similar amount at 260 million tonnes. While the carryout would still be down by about 10 million tonnes on the year, there is little concern over running out of wheat.
Futures: Minneapolis spring wheat futures hit a contract low of US$6.7875 per bushel on Jan. 18, with Canadian cash bids also under pressure. The front-month futures contract settled below US$7.00 per bushel for the first time in two-and-a-half years, possibly setting the stage for additional losses.
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Kansas City hard red winter wheat futures were looking equally bearish, trading below US$6.00 per bushel in the front month also for the first time in 2023/24. However, the Chicago soft wheat futures have held up a little better and have shown some signs of stabilizing.
Exports: Falling prices do lead to rising demand, and Canadian wheat is leaving the country at a breakneck pace. Total wheat exports through 24 weeks of 9.8 million tonnes, according to Canadian Grain Commission data, compare to 9.1 million tonnes at the same time a year ago and comes in well above the average for this time of year. That movement will likely need to be curtailed, as the grain just isn’t there to maintain the pace – implying possible price increases.
China has been a major customer for Canadian wheat so far this year, with Mexico, the United States and ‘other’ countries also showing solid demand.
Looking ahead: The U.S. Department of Agriculture estimated that 34.425 million acres of winter wheat were seeded in the country this past fall, which was down by 2.3 million acres from the previous year and below average trade guesses. However, drought concerns have been easing across the Plains and a return to average yields could still leave the U.S. with increased production on the year.
Agriculture and Agri-Food Canada’s early estimates for the 2024 Canadian wheat crop will be out soon and could provide some market direction, with the official acreage estimates from Statistics Canada still to come in the spring.
Farther abroad: The ongoing issues in the Red Sea have reduced European- and Black Sea-origin grain movement through the Suez Canal as shippers look for alternative routes. That adds to the price for that wheat headed from the region to Asia, possibly creating opportunities for North American grain crossing the Pacific.
